Nursing Home Chain To Pay $750,000 To Resolve False Claims Act Allegations

Baltimore, Maryland - Foundation Health Services, Inc. (FHS), its affiliated nursing facilities, and its president and chief executive officer Richard Daspit, Sr., have agreed to pay $750,000 to the United States and the State of Maryland to resolve allegations that they submitted false claims for payment to Medicaid and Medicare for materially substandard and/or worthless skilled nursing facility services. FHS is a Louisiana not-for-profit company that owns and manages nine nursing facilities in Pennsylvania, Mississippi, Virginia and Maryland, including Rock Glen Nursing and Rehabilitation Center, and Harborside (formerly Ravenwood) Nursing Center, both located in Baltimore City.

The settlement agreement was announced today by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Nicholas DiGiulio, Office of Investigations, Office of Inspector General of the Department of Health and Human Services (HHS OIG); and Maryland Attorney General Douglas F. Gansler.

The settlement resolves allegations that between 2006 and 2010, some of the skilled nursing services provided at several nursing facilities managed by FHS were materially substandard and/or worthless because FHS failed to (a) follow appropriate fall protocols; (b) follow appropriate pressure ulcer and infection control protocols; (c) properly administer medications to avoid medication errors; (d) appropriately provide for activities of daily living including bathing, monitoring, feeding and supervising for some residents; (e) provide appropriate mental health treatment; (f) answer call lights promptly; (g) employ a sufficient number and skill-level of nursing staff to adequately care for the residents; and (h) provide a habitable living environment, adequate equipment and needed capital expenditures. The United States and the State of Maryland further claimed that as a result of these failures of care, some residents allegedly suffered from falls, fractures, head injuries; malnutrition; dehydration; pressure sores and infections. FHS and the other released parties deny the allegations.

The government opened its False Claims Act investigation in the summer of 2010 when all of the residents of Ravenwood Healthcare, Inc., a Baltimore nursing facility operated by FHS, needed to be evacuated due to a breakdown of its air conditioning system. The temperatures during that July holiday weekend reached over 100 degrees. The government’s investigation uncovered other quality of care concerns at Ravenwood, the Rock Glen Nursing and Rehabilitation Center, also located in Baltimore, and at a Pennsylvania facility owned by FHS. FHS subsequently closed Ravenwood.

As part of the settlement, FHS and its related facilities have agreed to enter into a Corporate Integrity Agreement with HHS OIG. The agreement requires an independent monitor and allows HHS OIG to oversee the quality of care provided at all of the skilled nursing facilities associated with FHS over the next five years.

“Ensuring quality nursing home care is a top priority for the Office of Inspector General,” said Special Agent in Charge Nick DiGiulio, HHS Office of Inspector General, Philadelphia Regional Office. “It is unthinkable that nursing home owners would profit by skimping on needed health services, and basic facility maintenance, then sit back while vulnerable residents suffer. We will continue to hold nursing homes accountable to give residents the quality health services, and living conditions, we pay them to provide.”

U.S. Attorney Rod J. Rosenstein commended the HHS-OIG, the Maryland Attorney General’s Medicaid Fraud Control Unit and Civil Division of the Department of Justice for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Thomas F. Corcoran, who handled the case